Owners of assisted living home where worker was murdered convicted of Medicaid fraud

The owners of an Anchorage company that ran assisted living homes for people with disabilities were convicted Thursday of fraudulently billing Medicaid for services that were never provided, bilking state taxpayers of hundreds of thousands of dollars, prosecutors said.

The company, Flamingo Eye LLC, came under scrutiny by state investigators in 2015 after a resident at one of the homes killed his caregiver.

The trial lasted five weeks and included the testimony of a dozen witnesses. On Tuesday, jurors concluded that Flamingo Eye and its owner, Margaret Williams, were guilty of committing a number of crimes, including felony medical assistance fraud, between January 2011 and December 2016.

"The business model was to house vulnerable disabled adults approved for Medicaid-funded care, not provide that care at all or over-report the level of care provided, and fraudulently bill Medicaid," assistant attorney general Eric Senta wrote in a charging document.

On Nov. 7, 2015, Gilbert Nashookpuk called 911 and told police he strangled, kicked and punched his caregiver, Glenna Wyllie, at a Flamingo Eye home on Viburnum Drive in South Anchorage and hid her body behind a basement freezer. He was sentenced to 60 years in prison about two and a half years later.

At the time, the company was operating a number of assisted living homes for people with disabilities in the Anchorage area. The homes housed between 10 and 15 people at any given time, Senta wrote in the charges.

While investigating the business after the slaying, an investigator "discovered discrepancies and impossibilities on the significant majority of the Medicaid billing documents provided by Flamingo Eye," Senta wrote in the charges.

Examples included:

— Employees filing timesheets indicating they provided three hours of daytime rehabilitation services to six people individually in a single shift.

— Timesheets that reported clients were taken to businesses on holidays at times that the businesses were closed.

— Timesheets that were identical to the same day in every other month that calendar year.

— Timesheets that showed employees overseeing two different residences on the same shift, though the model calls for an employee to oversee a single residence on a shift.

An investigator with the state's Medicaid Fraud Control Unit spoke with several lower-level employees after discovering the paperwork discrepancies, Senta wrote in the charges.

Each of the employees admitted they had filled out documents that weren't true, or were true but later changed by supervisors, or were true and were disregarded by supervisors while billing Medicaid, Senta wrote.

In one instance, an employee recorded that he had taken two clients to baseball fields for exercise, which should have been billed at a group rate. From there, upper managers took his report and intentionally billed Medicaid as if the services were one-on-one, a much-higher rate, the charges say.

Another employee said he took a client to the Fifth Avenue Mall for daytime rehabilitation between 8:30 and 9:15 in the morning. That wasn't possible, since the mall was closed at that time, Senta wrote.

In such cases, Williams was paid personally at an inflated rate for the services, the charges say. Overall, she had been paid an average of $1.45 million from Medicaid every year since 2012, according to the charges.

Other complaints from lower-level staff involved the company either not providing services or providing services that were unsafe. The Medicaid fraud investigator reported an instance of an upper manager doctoring a report of a medical emergency to make it appear that 911 had been called right away, when that was not the case, Senta wrote in the charges.

The company faces a maximum fine of $2.5 million. Williams, the owner, faces up to 10 years in prison, a fine of $100,000 and restitution to the state Medicaid program.

Sentencing has been set for January. An attorney for both Williams and the company, Chester Gilmore, didn't immediately return a call seeking comment.